The State of the Actuarial Employment Market- Part One
Arthur J. Schwartz
To assess the state of the employment market for actuaries, I recently held a round-table discussion with a number of prominent recruiters. Our panel includes:
Patty Jacobsen, from D.W. Simpson & Company in Chicago, the largest actuarial search firm in the world. Patty is managing partner with her firm, which specializes solely in actuarial search within all lines of business including life, health, property/casualty, and pension. Patty can be reached at 1-800-837-8338 x229 or by e-mail at firstname.lastname@example.org
Margaret Resce Milkint, from The Jacobson Group in Chicago. Milkint is a partner and her firm places all types of specialties for insurers—actuaries of course, but also underwriters and claims specialists. She can be reached at 1-800-466-1578 or email@example.com
James Coleman, from Nationwide Actuarial Search in Las Vegas. His firm specializes in placing casualty actuaries only. He can be reached at 1-800-733-3536 or firstname.lastname@example.org
Pauline Reimer, ASA, MAAA, from Pryor Associates in New York. Named one the top 25 recruiting firms by Dun & Bradstreet, Pryor Associates has 30+ years of experience in the insurance industry (property/casualty, life, health, pension). Pauline has been director of the Actuarial Placement Division since 1986 and has a decade of her own employment experience in insurance and consulting firms. She has also been appointed to the Executive Board of Actuarial Society of Greater New York (ASNY) as vice president of Public Relations. Pauline can be reached at 1-866-6-ACTUARY or at email@example.com.
Schwartz: Let's talk about salaries. What would be typical salary ranges for a) students with 1-4 exams; b) pre-Associates with 5-6 exams; c) new Associates; d) new Fellows; and e) experienced Fellows (about ten or more years beyond Fellowship)? (Editor's note: Each of the recruiters submitted a table of compensation levels that vary by number of exams and years of experience. The table reflects the consensus of their comments.)
Jacobsen: A brief summary of what we see would be as follows. For the entry-level students with 1 to 4 exams, with experience from 0 to four years, $42K to $79K. For near-ACAS, 5 to 6 exams, and 0.5 to 4 years, $57K-$97K. For new ACAS, with experience from 0.5 to four years, $65K-$104K. For near-FCAS, 8 to 9 exams $78K to $130K. For new FCAS $106K-$168K. For experienced FCAS, anywhere from $98K-$233K, depending on years of experience, and type of job responsibilities.
Coleman: I would generally subscribe to those numbers. Note that ranges for students can be pretty wide depending not only on number of exams, but on how quickly they progress through the exams. Another caveat: we sometimes see some regional employers who tend to pay somewhat below the averages noted. These organizations tend to hire people with ties to their geographical area, which will yield people who will accept pay at the lower end of the range just to be able to live in the area.
Jacobsen: I don't agree. Employers see that they have to compensate actuaries at national averages, and they will step up to the plate. If an actuary is interested in an area where the cost of living is less, then it just happens to be a plus since there may be a higher quality of life due to a lower cost of living.
Milkint: I also don't agree. Actuaries see the employment market from a national and increasingly international perspective. So employers realize that their compensation has to match national levels.
Reimer: With clients both domestic and abroad, I am observing compensation ranges of: for 1 to 3 exams with no experience, $50K to $60K. For 1 to 4 exams with some experience, $55K to $80K. For 5 to 6 exams, $70K to $95K. For new ACAS, $95K to $150K. For new FCAS, $100K to $180K. And for experienced Fellows, compensation is highly variable depending on the position's responsibilities and the caliber of the candidate. Many experienced Fellows are earning in excess of $200K, and even $500K is not uncommon.
Jacobsen: At D.W. Simpson, we have a team of recruiters dedicated to recruiting and working with entry-level candidates and entry-level positions. In addition, we have a sister company which handles out-sourced college recruiting and all salaries are reported to our Webmaster (who's an ACAS) to be plugged into our salary survey. We believe that gives a very accurate salary picture for the entry-level students.
Coleman: Some entry-level positions are being offered in the low 40's range.
Reimer: We see that too, however if there is a bonus, that can lift compensation for entry-level positions up to the 50's.
Milkint: I agree with Patty and Pauline. We definitely see an escalation of compensation levels for new Associates and new Fellows. Often for new Fellows, this is accompanied by executive level management responsibilities or new business responsibilities. For experienced Fellows, we often see compensation in the $150K-$250K range varying by level of responsibility.
Coleman: In general, the lower pay levels impact people with a limited breadth of experience. This would be seen where they may have reserving but limited pricing experience, or pricing personal lines experience only with no commercial lines orreserving experience. Where we see a good strong general experience matched with exams to years experience, we see higher compensation ranges. This ties back with strong communications skills, business understanding, and technical skills, all bringing added value that the individual can demonstrate in his job function. In general, at present, we see a higher demand for commercial lines and finite reinsurance that drives slightly higher pay over personal lines. This will shift back, over time, as supply and demand seek equilibrium.
Schwartz: How active is the job market for each of these categories? How has the current slowdown in employment in the economy generally, affected employment opportunities for actuaries? Are there any bright spots, either now or on the horizon?
Reimer: One of my roles as a vice president of the Actuarial Society of Greater New York (ASNY) has been chairing an Actuarial Career Day. One notable trend is an increase in the trainee pool, especially of second- or third-career applicants, for example, those displaced by the dot.com boom who are seeking a more stable career. While a decrease in the number of applicants sitting for Exam 1 was expected due to the syllabus changes in 2000, in fact the exact opposite held true. From 2000 to 2003 we have seen a 102 percent increase in candidates taking Exam 1 compared to an 18 percent increase from 1997 to 2000. The restructuring on Wall Street and the economic doldrums in information technology (IT) are major factors. We've also seen a substantial increase in students sitting for exams from countries outside the United States. As many as one third of the students taking Exam 1 are coming from several Asian countries, particularly China. In fact, the largest exam centers in the world, right after New York City, are Beijing, China and Seoul, Korea. (Editors note: The Hong Kong, China testing center may have had a temporarily reduced number of candidates, due to the SARS epidemic.)
While opportunities seem to be diminishing for life and pension actuaries, opportunities are abundant for P&C actuaries, especially in reinsurance. Since 9/11 there have been several new reinsurers entering the market (which has offset the loss in jobs from reinsurers that have merged or closed operations). The new reinsurers have fueled a tremendous growth in the number of reinsurance positions and related compensation levels.
Coleman: The job market is very active in all property & casualty areas. The mix of opportunities we see is roughly 20 percent for those with 1 to 3 exams, 55 percent for 4 to 7 exams, and 25 percent for Fellows and near Fellows. The current economic slowdown has impacted largely through higher salary ranges, smaller increases in offers, and protracted hiring cycles (the time from phone interview to offer).
Milkint: Specialty insurers have been especially keen. Between 2000 and 2003 many outside the insurance field saw insurance as a bright spot. Employment in the insurance industry has continued to be strong while other parts of the economy have careened off the tracks. We do not see any slow down—not even a pause—in the demand for actuaries.
Reimer: That strong demand is more true on the P&C side rather than the life side.
Milkint: P&C is definitely more active. Life and health is coming back somewhat.
Jacobsen: The health actuarial side is coming back stronger than it has been in the past two years. Life actuarial has been soft but has started to pick up. On the P&C side the market has remained strong. If an actuary loses a position they will, in general, be able to find a new position quickly. More actuaries are moving into roles in claims and underwriting.
Sarbanes Oxley (SOX) has had a "full employment for actuaries" effect. Actuaries are seen as professionals with outstanding overall enterprise risk management skills that will help lead to better controls over the management of the business. Since the CFO and CEO have to attest to the overall financial health of a company, I believe there will be greater empathy with the appointed actuary.
Milkint: For the actuary this is a role that shifts their position right into the mainstream of the company's executive staff. CFOs are asking appointed actuaries to review their checks and controls on all financial matters. Boards of directors will look to the appointed actuary for guidance and to be sure that all is in compliance with SOX. The appointed actuary may be setting up checks and controls, and making the whole financial reporting system work. Boards of directors look to you, the actuary, as a professional with a reputation for honesty and integrity. And for compliance purposes, the board will often pass things by an actuary as a final test or a litmus test.
Reimer: SOX has also had a significant impact on consulting actuaries. In general, under SOX, products and services provided by actuaries in accounting firms may not overlap with those products and services that are being opined on by the same firm. Additionally, clients' audit committees are now required to pre-approve budgets for consulting services provided by the auditor. Therefore, consultants must continually monitor their services to stay within the pre-approved guidelines.
Jacobsen: At the recent CLRS in Chicago, SOX was an extremely hot topic. In one of the sessions I attended, it was stated that the actuaries can do the work and advise on SOX but cannot sign off. Only the CEO, the CFO, or the appointed actuary can sign off on the financial controls and statements.
Milkint: The silver lining of Sarbanes Oxley is that we, as recruiters, all knew the capabilities of the actuary. Now what would have been seen as an actuary in a nontraditional role is becoming a role absolutely central to the enterprise's health and well-being. Actuaries are now being looked to for measurement towards goals and performance. The role of the actuary is being broadened and today actuaries are taking their place at the leadership table in increasing numbers.
Coleman: There are more instances of actuaries being brought into the annual business planning cycle from the start of that process. Actuaries are also instrumental in quarterly and monthly forecasts where they work with the finance people to coordinate GAAP and statutory reporting. It's a definite role expansion for actuaries.
Milkint: We see more activity like this in personal lines.
Coleman: On another topic, the hiring cycle used to be around 60 days, now it's converging on 90 days. There's increased candidate competition, and companies are taking the time to evaluate candidates more closely, and to secure agreement at all appropriate management levels prior to extending offers.
Jacobsen: The hiring managers though are often overwhelmed by their workloads and therefore it's taking longer. Also, there tend to be more steps in the hiring process, but also more courting is needed by the companies to attract the candidates.
Milkint: Candidates are coming under a higher level of scrutiny. More employers are asking for background checks. We live in a post-Enron world. Employers do not want to make mistakes. So there are many more checks.
Reimer: More employers now require extensive background checks. This can include a criminal check and a credit check. One reason for the credit check is that employers eschew candidates with personal bankruptcy filings.
Jacobsen: If there's a filing for bankruptcy, that's a negative for that candidate because the candidate is seen as being financially irresponsible and the company views the person as a risk. Everyone (especially if you work at an accounting firm) needs to have a clean background.
Coleman: If an actuary is convicted of a felony or other significant crime, his or her actuarial career will be very limited looking forward, as a result. Companies view such circumstances as potential exposure that they are usually unwilling to incur.
Reimer: More employers are now requiring a drug test.
Milkint: More employers are now requiring psychological assessments. Sometimes these are online, sometimes face-to-face with a psychologist. These are increasingly required even for positions with mid-level management responsibilities.
Schwartz: What opportunities are there for retired actuaries, part-time actuaries, and for telecommuting actuaries? Are opportunities in any of these three areas growing or declining and why?
Coleman: There are essentially three options for retired actuaries to consider. In the first, the actuary retires and leaves the profession totally—in fact, retires. They prefer to spend their time with their family or to pursue other personal choices. Secondly, the actuary retires but transitions into consulting for their former employer, and maybe takes on some small external projects. Third, the actuary retires and opens a competitive consulting practice. These are often one-person shops. They may already know their clients with whom they may have built strong personal relationships over many years.
Reimer: For part-timers, we see opportunities in reinsurance in helping with 1/1 renewals, so they may be hired on a part-time or temporary basis in the 4th quarter. Also, some insurers need help with their year-end Annual Statement reporting work.
Coleman: In part-time positions, we most often see credentialed women who are starting a family. However the number of opportunities we see like this is very small, well below one percent.
Jacobsen: We also do not see many opportunities for part-time positions. When it does occur it's usually where a person has built a reputation with a company and wants to work from home. Rarely do we get requests to look for a part-time position from an employer.
Coleman: Part-time work may offer an acceptable transition to a reduced workload toward retirement or family matters. However opportunities are very limited.
Milkint: Our company has created a new division to deal with interim (part-time) staffing. It's the fastest growing division at Jacobson Associates. We think it makes the workplace more interesting and allows employees more flexibility. A lot of actuaries could retire at say 55, but they have a great deal of excellent experience. When you bring in someone like this on a part-time basis, they can be seen as a "learned statesman" who can offer practical know-how. On a part-time position, some organizations are looking for someone to work 20 to 25 hours a week. Many organizations are more open than ever to a telecommuting option. Telecommuting greatly benefits new parents.
Reimer: Over the past ten years, I have not seen much of an increase in telecommuting within the insurance industry. There are usually two occasions when this commonly does occur: first, when there's the birth of a new child; second, when there's a relocation necessitated by a spouse's job. Sometimes we'll see a situation where the organization relocates but the employee, often for personal reasons, cannot easily do so and so the company offers its current employees an opportunity to telecommute in an effort to retain those individuals in its employ.
Jacobsen: It helps if you are already an employee and if the organization values your work and knows your abilities. Then, in general, they will accommodate. But right off the bat telecommuting positions are rare.
Milkint: Yes, it helps if they know who you are. We see this often in underwriting and claims positions as well as actuarial.
Reimer: Also, consulting often involves travel, possibly from one-third to one-half of one's time. Thus a consulting firm is more likely to accommodate a telecommuting option.
Coleman: Telecommuting is offered on a limited basis by larger, multinational companies or where the work lends itself to low personal interaction with team members. This may also be an option with difficult-to-fill positions. Again, largely driven by the level of face-to-face interaction needed in the position.
Schwartz: Thank you all for a great discussion!
(Editor's Note: Part Two of the Roundtable Discussion will continue in the May issue starting with a topic that's been increasingly in the news: employers' EEO policies.)